New Home Sales Slow in June

New home sales slowed in June, dropping 2.5% from May. Despite the month's drop, sales were up 23.8% from June 2022, as new construction strove to meet market demand, according to data from the U.S. Census Bureau and Department of Housing and Urban Development released Wednesday.

Sales of new single-family houses in June dropped to a seasonally adjusted annual rate of 697,000, from the revised May rate of 715,000.

Because mortgage rates have remained elevated, would-be homebuyers are sitting out of the market, waiting for conditions to improve. That’s left a dearth of inventory across the country, which has boosted demand for newly built homes.

“In a break with the recent pattern, new home sales surprised to the downside in June and sales for prior months were revised lower,” economists at Oxford Economics wrote in a press release. 

They expect a further decline in new home sales as the summer goes on. 

“We expect new home sales to soften further as the economy enters a recession and the labor market softens," the Oxford Economics economists wrote. "However, a tight supply of existing homes and resilient demand should keep a floor under sales.” 

Housing starts also fell in June, with construction for new homes falling 8% in June. Builders are also offering fewer incentives to buyers. Only 22% of builders reported cutting prices as July began, down from 25% in June and 27% in May.

The median sales price of new homes sold in June 2023 was $415,400, down slightly from May’s median sales price of $416,300. The median sales price was down 4% year-over-year. On a seasonally adjusted basis, the supply of new houses for sale was 432,000, or about 7.4 months of supply at the current sales rate. 

Regionally, the drop in sales was largely due to a decline in annual sales in the Midwest and West. On a year-over-year basis, sales fell in the Midwest by 7.6% and in the West by 16.5%. 

In the South, sales grew by 3.2% and in the Northeast, they grew by 4.7%.